A Complete Rundown on an Intellectual Property Agreement

Standardized Legal Documents A Complete Rundown on an Intellectual Property Agreement

An Intellectual Property Agreement—The Whats, the Whos, and the Hows

An intellectual property agreement is one of the trickiest legal documents for people to understand.

With many types of intellectual property existing in the first place, protecting this type of property involves intricate rules and regulations.

Whether you are a creator or want to use someone else’s content, this article will help you learn how an intellectual property agreement works.

What Is an Intellectual Property Agreement?

An intellectual property agreement is a legally binding contract between two entities—the owner of intellectual property (IP) and the buyer who wants to use that IP. The owner can also be called the seller or the licensor, while the buyer is sometimes called the licensee. The parties to the agreement can be individuals and companies.

Common types of intellectual property agreement are:

  • A royalty agreement—Used when the owners of IP are compensated through regular royalty payments. For example, a musician will give Spotify the right to use their songs for streaming purposes. The musician, in return, receives regular royalty payments in the amount that is agreed upon. The licensor benefits from reaching a wider audience and enjoying a steady revenue. The licensee gets to use the product they would not have the right to otherwise
  • A licensing agreement—Chosen when the licensor sells only a portion of his or her IP rights
  • An intellectual property (IP) assignment agreement—Entered into when the owner wishes to transfer full IP rights to another person

What Types of Intellectual Property Exist?

If you want to understand intellectual property agreements, you need to familiarize yourself with what the term intellectual property entails and what types of intellectual property exist.

Intellectual property represents the intangible asset of an individual or company. Any original creation that is not physical can be considered IP.

The following table includes the different intellectual properties across industries that use IP agreements:

Intellectual Property Type

What It Usually Includes

Franchises
  • Company names
  • Trademarks
Trade secrets
  • Models
  • Design
  • Patterns
  • Recipes
Trademarks
  • Logos
  • Symbols
  • Phrases
Copyright
  • Music
  • Films
  • Books
  • Original characters
Patent
  • Models for electronic devices
  • Software

Who Needs an Intellectual Property Agreement?

Any individual or company that produces intangible assets, wants to sell rights to those assets, or needs to partner with someone to manufacture more products based on the original design needs an intellectual property agreement.

A solid and carefully drawn up IP agreement:

  • Ensures that the owner will get compensated
  • Prevents the IP infringement
  • Determines how any future disputes will be resolved

How To Create an Intellectual Property Agreement?

When it comes to any legal document you need, there are usually three ways to get it:

  1. Hiring a lawyer to draw up the contract for you
  2. Downloading a contract template
  3. Writing the contract on your own

Should You Get a Lawyer?

Hiring a lawyer to write you a contract may seem like the best solution, but unfortunately, it’s not an affordable one.

What Can Go Wrong With Using a Contract Template?

The other option you have is to use a contract template from the internet. This isn’t the optimal choice either since contract templates:

  • Include a lot of outdated information
  • Are too generic and don’t contain the clauses you need
  • Aren’t tailored according to the specific laws of your state or county
  • Contain spelling and grammatical errors

What Sections To Include in Your Intellectual Property Agreement if You’re Writing the Contract Yourself

Drafting your own intellectual property agreement may be the optimal solution. Here are the sections you need to include in it:

Intellectual Property Agreement Sections

The Information To Include

Parties to the agreement
  • Legal names of the parties
  • Terms that will be used throughout the contract to refer to the parties
Intellectual property 
  • Definition of intellectual property
  • Type of IP
  • Description of IP
  • How in which the IP will be used
Payment 
  • The amount the owner will get for selling the IP rights
  • Payment schedule and method
DurationThe period during which the contract will be in effect
Indemnification
  • Acts that will be considered a breach of the agreement
  • Ways the parties will be held responsible for breaching the terms
  • Dispute resolution plans
LocationThe geographical area(s) on which the IP can be used
Additional contracts
SignaturesHand-written signatures of the parties and any witnesses to the signing

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